This paper investigates the effect of matrix ductility on toughness in a carboxyl-terminated butadiene-acryionitrile copolymer (CTBN) toughened diglycidyl ether of bisphenol-A (DGEBA)-piperidine system. Two kinds of epoxides were blended separately into this system to change the matrix ductility. One was a rigid and polyfunctional 4,4’-diaminodiphenol methane (MY720), and the other was a flexible diglycidyl ether of propylene glycol (DER732). The matrix T-g was significantly changed, but without alteration of the microstructure of the dispersed rubbery phase. The result of fracture energy tests reveals that the toughness of the neat epoxy resins increases slightly with the increase in the resin ductility. The toughness of the rubber-modified epoxy resins increases strongly with matrix ductility. Studies on the morphology of the toughened systems and their fracture surfaces indicate that the size of the plastic deformation zone under constant rubbery-phase morphology is determined by the multiple but localized plastic shear yielding. Increasing matrix ductility increases the size of the plastic deformation zone by inducing more extensive shear yielding. In addition, fracture surfaces reveal that as the matrix rigidity is increased, an increasing proportion of the fracture energy is dissipated by rubber cavitation during crack initiation.